Dan Morain: Even after gas blast, PUC has other priorities

The California Public Utilities Commission was created by a citizen initiative in 1911 to regulate railroads. In 1912, it began regulating public utilities, such as the Pacific Gas and Electric Co.

As residents of San Bruno and Rancho Cordova know, the commission's record of overseeing utilities' natural gas pipelines is less than stellar.

Still, in grandiose fashion, the PUC in 2010 embarked on CES-21, short for California Energy Systems for the 21st Century. CES-21 would focus on far-reaching projects, including cybersecurity of the power grid, integrity of the natural gas system, efficient transmission of electricity, and integration of alternative energy sources into the system.

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As envisioned by the commission's long-serving President Michael Peevey, PG&E, Southern California Edison and San Diego Gas & Electric would spend $150 million in ratepayers' money over five years on the project, to be carried out at Lawrence Livermore National Laboratory.

In December when the commission approved the project, Peevey declared that it "is very likely to provide benefits to ratepayers that exceed costs across both electric and gas operations by avoiding unnecessary purchases of power support services and by identifying with precision places where more grid investment is needed."

As it happens, Peevey got ahead of himself. Voters long ago limited government's power to raise taxes by generally requiring two-third votes, and insisting that fees be used to pay only for projects or services directly tied to the fees.

The California Public Utilities Commission tried to grab the $150 million in ratepayer money without a vote of the Legislature. It also sought to use fees from electricity users to fund natural gas improvements, and gas fees for the electric grid, something legislative aides viewed as illegal.

Then there's the politics. Sen. Jerry Hill, D-San Mateo, has been calling for Peevey's ouster for months. Hill represents San Bruno, where a PG&E gas pipeline exploded in 2010, killing eight people. Two years earlier, a PG&E pipeline blew in Rancho Cordova, resulting in one death.

"No one can trust the PUC to do the right thing for safety. But that's its core mission," Hill said. "We have to make changes to how it does business, because it's not capable of changing itself."

Earlier this year, the Senate and Assembly budget committees voted to block the entire $150 million expenditure.

But on Monday night, as part of the budget compromise struck this week, Gov. Jerry Brown, Peevey's longtime friend, persuaded the Senate-Assembly budget conference committee to restore $35 million, limiting the work primarily to cyber-security. Legislative budget writers agreed but not without grumbling.

"The Legislature is stepping in, and it is not in a vacuum," Senate Budget Committee Chair Mark Leno, D-San Francisco, told me. "The commission's job is to regulate utilities, not to be playing in the sandbox with them."

In addition to limiting CES-21, the budget committee voted to ban the commission from using ratepayers' money to establish nonprofit corporations. There's a history here. Under Peevey, the commission has established several nonprofits, installing Peevey as chairman of the boards and his associates in six-figure posts overseeing the entities. There is, for example, the California Emerging Technology Fund, endowed by $60 million from phone companies.

On its latest publicly filed tax return, the fund describes its mission as providing "leadership statewide to minimize the digital divide by accelerating the deployment and adoption of broadband and other advanced communication services to unserved and underserved communities (and) ensure that California is a global leader in the availability of broadband technology."

That sounds lofty, though I'm not sure what it means. Similarly, CES-21 has a goal that for us mere mortals might be difficult to grasp.

According to a filing with the commission, CES-21 would "combine data integration with the nation's most advanced modeling, simulation, and analytical tools provided by (Lawrence Livermore National Lab) to provide unprecedented problem-solving and planning necessary to achieve California's ambitious energy and environmental goals for the 21st century." That must mean we'll all be safer.

It makes sense that Lawrence Livermore, which operates under the U.S. Department of Energy, would have a role in protecting the power grid. The lab, created to develop nuclear bombs in the Cold War, does need a reason to exist beyond weapons development.

But back to mission creep. In addition to regulating utilities and phone companies, the commission is supposed to license limousines. On Sunday, a limo caught fire in Walnut Creek as 10 older women, some relying on canes and walkers, celebrated their friend's 90th birthday. They escaped. A month earlier, a limo caught fire on the San Mateo-Hayward Bridge killing five women.

The power grid must be protected from cyberattacks. But as the California Public Utilities Commission focuses on such weighty matters, is it too much to ask that the PUC also make safety a priority, so that pipelines don't explode and limousines don't catch on fire?

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About This Blog

Dan Morain has been a columnist for The Sacramento Bee since 2010, focusing on state government and politics. He previously worked for The Los Angeles Times, covering the California Supreme Court when Rose Bird was chief justice, the Legislature when Willie Brown was speaker and the governor's office during Gray Davis' tenure. Dan Morain can be reached at dmorain@sacbee.com or 916-321-1907. Twitter: @DanielMorain.